Next Macro Regime Shift Promises to Turn Goldilocks Upside-Down

The macroeconomic backdrop of the past year is about to be turned on its head, warns Morgan Stanley.

“After 12 months of falling core inflation and rising global PMIs, we are set to enter a period of rising core inflation and (likely) declining PMIs,” writes cross-asset strategist Andrew Sheets. “That’s a major change, and prior instances of ‘inflation up, PMIs down’ (2000, late 2007 and 2011) also caused volatility.”